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Continue. The warning is expected, since OpenVZ VPSs do not have their own kernels -- they operate on the physical host's kernel. OpenVZ is more like an enhanced chroot rather than a true virtual machine in that respect.

Important - if your running kernel is less than 2.6.24

Please check your current kernel version with uname -r. If it is less than 2.6.24, the upgrade will fail half-way with a glibc error. That happens because the glibc included by default with 12.04 requires a minimum 2.6.24 kernel -- glibc are the critical C libraries used by every application.

At that point, you will need the instructions [from this answer], as pasted below:

I've set up a PPA containing a recompiled libc which is compiled to work on 2.6.18 or newer (please check uname -r!), and it should override the current libc provided by Precise. Just add ppa:izx/ovz-libc, update, and it should let you get past this. Specifically, something like this:

and continue on until the upgrade completes successfully. I highly recommend NOT replacing any changed or non-existent config files.

I will be keeping the ppa updated as and when libc is updated upstream. The PPA package includes a pin so that it will only be updated when the new fixed libc is available on the PPA, not when it first appears in the official repositories.